The red-hot California housing market experienced record sales this year, but sales are slowing as winter approaches.
The lull is thanks to rising interest rates and increased inventory, says Turlock real estate agent Michael Rocha of Atlantic Realty, as well as “burnt-out” buyers who are waiting for the competition to pass in order to purchase a home. Cash offers on homes priced higher than usual led to an exhausting buying process for many in search of a home over the summer, Rocha said.
With prices leveling out, however, it could be a good time for those feeling left out to start their search again.
According to the most-recent California Association of Realtors report summarizing October, the state’s median home price was $798,440, down 1.3% from September and up 12.3% from October 2020. This marked an average below the $800,000 threshold for the first time in seven months.
In Turlock, Theis Realty Group reported on Nov. 22 that the six-month year-to-date average home price is $474,888 — up 19.3% from last year.
The average home price in Stanislaus County was $450,000 in September and remained at that number through October, the CAR report states. In Stanislaus County, the average home price was $440,000 in September and October.
“It's good that we're starting to see home prices start to become a little more stagnant because it's a sign of a healthy market,” Rocha said. “And we were in a very unhealthy market for two years.”
Though market competition still remains, Rocha said that homes needing work are remaining on the market longer than turnkey, move-in ready houses thanks to the increasing cost of home improvement supplies.
While the statewide median sales-price-to-list-price ratio remained above 100%, it was the lowest level in eight months in October and in the latest monthly report, nearly two-thirds (60.2%) of homes sold above the asking price, the lowest level since February 2021.
In Turlock, homes are staying on the market for anywhere from 15 to 40 days, Rocha added. Even homes that are move-in ready are staying on the market longer, receiving three to five offers rather than 10 to 15.
As more people notice the market lull as well as increasing interest rates, Rocha predicts 2022 will bring the same high prices with more competition returning in the summer.
“I think we'll start to see some buyers kind of come out of the woodwork earlier than usual. Springtime and summertime are really the hottest times of the year,” Rocha said, noting February is one of the best times to buy. “But, with interest rates expected to go up, there definitely is an upside to buying at this time.”